Broker commissions safe for now: Deloitte

A new report from accounting firm Deloitte has described intense margin and cost pressure among both major and non-bank lenders, but this is not expected to result in further decreases to commissions.

Deloitte partner James Hickey told Australian Broker that the banks are facing continued intense funding pressures, and that mortgage discounting and competition for deposit funding was putting a squeeze on costs.

However, Hickey said that at present, there is no appetite from lenders to decrease broker commissions any further.

"In any assessment of the end-to-end earnings and value chain of a mortgage, the cost of paying to third parties does come into that equation so I have confidence that it is certainly being looked at."

But the consensus of a Deloitte mortgage lending round table, which consisted of representatives primarily from lenders, was that commissions would not be targeted as a potential cost cutting measure.

"The view of the collective group was that in 2013 we won't be seeing commission reductions of a material scale happen," Hickey said.

"Lenders understand and are supportive of the broker channel because of the proportion of consumers that choose them; it is an important one in terms of meeting those consumer needs and therefore lenders understand that brokers need to earn a living, to actually keep being successful in this marketplace."

The consensus of the mortgage lending roundtable was that there would be further consolidation of smaller broker groups in 2013, and many were confident that brokers would continue to grow their market share.

The round table participants had mixed views on what brokers would need to do over the next three years to be successful, with the majority saying they would need to improve cross-sell, and others that they would need to further leverage their back book for retention of their customers.

The banks are constantly claiming 'funding pressures' but it is complete nonsense. A recent report by RP Data showed that the gap between SVR and deposit rates hasn't been higher since the early 90's. see: http://image.e.rpdata.com/lib/fe591570776d03757d17/m/3/2012_11_09_Cash+rate_variable_L.jpgI can't believe how much BS the banks continually come out with.